Is sub2 legal

4 Replies

Is sub2 legal in North Carolina?Because it says in NC General Statutes - Chapter 75 Article 5A that you have to pay the seller 50% of the appraised value of the home.Because for someone to do a sub2 the arv and loan balance is pretty close together.If it were 50% difference between the arv and the loan balance they could easily sell the house.

@Kenneth Guin , I would have thought that sub2 is the DEFAULT position when buying property, meaning that it is always understood that any pre-existing mortgage would be paid out by the Seller upon closing. It's only when the values are close to each other that the Buyer wants to make sure that the Seller is aware that their Offered price is only valid SUBJECT TO the Sellers' Lender clearing off the Mortgage. Did I get that right?...

Updated almost 6 years ago

Oops! Apparently the main use of Sub2 is to NOT pay out the Mortgage? That seems fraught with danger for both sides (hence the many threads)...

@Kenneth Guin , I believe the answer to your question is yes.  If you check out episode two of the BP podcast with Karen Rittenhouse, you'll see her and her husband have built quite a lucrative business in North Carolina doing subject-to financing.  

To your other point, when purchasing subject to, you will most likely be purchasing the home for at least 50% of the appraised value of the home...you are simply purchasing it subject to the current financing.

I highly recommend that podcast if you are having trouble sorting out subject to financing.  

Hope this helps!